jaysheng wrote :why is the indian market still valued at 2 Stars? not attractive?

Expensive. Look at its P/E Ratio. Bubbling. Indian government also trying to control inflows and things might cool. Lack of infrastructure development a drag. Indian government is very disunited and tends to overmeddle and muddle around.

India's stock market, one of the world's most expensive, is likely to be a safe haven for investors in '08 because of the economy's low exposure to slowing global growth, Merrill Lynch strategists said on 11/1/08.

Rolling out their top picks in Asia this year, they said global investors should also be overweight Chinese shares, though less so than in '07, as well as HK issues, while going underweight South Korean and Taiwan markets.

They predicted India will fare better than more trade-dependent economies as U.S. growth slows, noting exports of goods and services account for about 1/5 of its GDP, compared with 40% for China.

"Its valuations look steep, and it's a crowded trade ... but it's the nature of lifeboats to get crowded. And there is some merit to the idea of India being seen as one now," Mark Matthews, Merrill Lynch's chief Asia equity strategist, told a media briefing in HK.

"It's our sense that it can remain in a protracted expensive valuation zone because there's not enough reason to sell it." India's SESEX, which hit a record high on 9/1, trades at >20x 12-month forward earnings, compared with about 18x for HK-listed shares of Chinese companies.

The U.S. investment bank said China is still its 2nd favourite Asian market after HK, but it had reduced its overweight rating partly because of concern about China's high inflation rate. It warned the market could face a tough 1st half.

"The jury is still out on Chinese inflation, and because exports are not a small part of Chinese GDP, that market is likely to remain in a directional no man's land until there's firmer evidence on both inflation and exports," Matthews said.

Other suggested stock market overweights included Malaysia, Pakistan, S'pore and the Philippines. Merrill said these were preferable to South Korea and Taiwan, where economic growth prospects are "unexciting at best".

On the currency front, the investment bank said the US$ was likely to come under further pressure in the 1st half, which would benefit Asia currencies. It said the yen was likely to rise against the dollar, and that investors should be long the S$ against the US$.

"The world will increasingly come to realise that the larger Western economies are in a structural decline relative to Asia, and the transfer of wealth from the West to the East is not ending. In fact it's just getting started," Matthews said.

jaysheng wrote :why is the indian market still valued at 2 Stars? not attractive?

Yes, it has been rated by FSM by 2 stars, not attractive, since last year. But, it's also one of the best fund in 2007. Hmm, .

Actually, I want to invest in India fund since last year, but because of not attractive rating, I decide to go more to Asia fund/Emerging Markets, which funds like UOB United Asia and Aberdeen Emerging markets, which the return is not good at all so far.

India's biggest ever share offer by Reliance Power was fully subscribed within a minute after it opened Tuesday aiming to raise nearly three billion dollars, a banker said.

The initial public offering of the company owned by Indian tycoon Anil Ambani was oversubscribed six times just thirty minutes later, they added.

"The issue was fully subscribed within the first minute at the higher end of the price band. It now stands six times oversubscribed based on data being collated," said a merchant banker close to the issue on condition of anonymity.

Reliance Power is offering 260 million shares or 10.1 percent of its capital amid forecasts that the energy demands of India's fast-growing economy will help to create a booming business.

The company aims to raise between 105 billion and 115 billion rupees (2.6 to 2.9 billion dollars) through the share offer, which runs for three days.

The shares are priced at 405 rupees to 450 rupees, with retail investors set to be given a discount.

The firm is a unit of Reliance Energy, which has said the share offer's proceeds will fund the development of power projects.

jaysheng wrote :why is the indian market still valued at 2 Stars? not attractive?

Yes, it has been rated by FSM by 2 stars, not attractive, since last year. But, it's also one of the best fund in 2007. Hmm, .

Actually, I want to invest in India fund since last year, but because of not attractive rating, I decide to go more to Asia fund/Emerging Markets, which funds like UOB United Asia and Aberdeen Emerging markets, which the return is not good at all so far.

not sure why people are basing their decisions on fundsupermart's rating. its being an ass now that india has out performed the rest. This shows so much about the predicting pwoer of ratings.

What are you looking for in an India fund? because getting a 30% returns is not enough as others are getting a 60% returns? I think you have become the sad state of investing that I see.

jaysheng wrote :why is the indian market still valued at 2 Stars? not attractive?

Yes, it has been rated by FSM by 2 stars, not attractive, since last year. But, it's also one of the best fund in 2007. Hmm, .

Actually, I want to invest in India fund since last year, but because of not attractive rating, I decide to go more to Asia fund/Emerging Markets, which funds like UOB United Asia and Aberdeen Emerging markets, which the return is not good at all so far.

Be careful. You seem to be very affected by the latest "fad". You may end up chasing the latest thing that is going up, just in time to catch it when it starts falling down.

Investors are punishing stocks in India more than in any of the other largest emerging markets as government measures to curb inflation cut profits.

Price-to-earnings for the entire Indian market slumped 33% as foreign investors turned net sellers for the 1st time since at least '00, more than in Brazil, Russia and China, where they fell 10% to 31%, data compiled by Bloomberg show.

Investors are showing less faith in India - even after the benchmark Sensex jumped 13% from its Mar low - because companies produce fewer commodities than Russia and Brazil, the nation's GDP is growing slower than China's and a scarcity of coal, oil and iron ore drove inflation to a 3-year high.

"I'm just not finding a compelling reason to be in India," said Uri Landesman of ING Groep NV's asset management unit in New York.

"With little natural resources given their population, inflation might be a problem and the government might end up quashing some of the GDP growth."

India is the only so-called BRIC market where Landesman isn't invested after he sold the last of his Indian stocks at the start of the month. He declined to name them. India is also the only BRIC nation where economic growth is forecast to slow for a 2nd consecutive year in '08, according to IMF.

BRIC is an acronym coined by Goldman Sachs in Nov '01 to encompass 4 emerging markets it predicted would join US and Japan as the world's biggest economies by '50.

Overseas fund managers pulled a net US$3.03b out of Indian equities in the 1st 3 months of the year, Bloomberg data show. That's the 1st time foreigners have been net sellers on a quarterly basis since the data were 1st compiled in '00.

"There are no triggers really for the markets to move up," said Mahesh Patil of Birla Sun Life Asset Management in Mumbai.

The declines have made stocks too cheap for some investors to pass up. Prudential ICICI Asset Management Co., India's biggest money manager, and Merrill Lynch's local management unit are among those betting on India's plan to spend US$1t this decade on roads, railways and airports.

"We remain very positive," said Michael Konstantinov, chief investment officer for emerging market equities at RCM, a division of Allianz Global Investors. "I'm looking for the right time to increase our holdings."

UBS, the top-rated research firm for Asian equities in Asiamoney magazine's '07 broker poll, is more skeptical. It predicted last month that rising prices will cause India's central bank to tighten monetary policy, which will curtail earnings growth and end 6 years of stock gains that lifted the Sensex 522%.

"India's probably going to remain out of favour," said Geoff Lewis, head of investment services at JF Asset Management. "It's not the time to be putting more money in."

Indian shares are valued at 10.9x analysts' estimated '08 earnings. That's the lowest among the 4 BRIC markets.

The Indian government last month asked companies to consider sacrificing some profits to help contain inflation, the fastest since Nov '04.

China, which has US$1.68t in foreign reserves, more than 5x India's balance, has beaten out its South Asian rival on the purchases of over US$10b in oil & gas assets from Nigeria, Kazakhstan and Canada in the past 2 years.

"The Chinese government just has their act together more than the Indian government does," Landesman said. "I have no idea what I'm going to get from India.

I'll put down some facts abt the Indian economy, corporate and markets which I guess should help you decide what you want to do with your holdings.

First, India is facing multiple deficits - budget, trade and current account. All these deficits have been increasing as a % of GDP and also absolute level. This has been putting pressure on the currency (INR) despite high interest rates (read carry trade). One of the reasons for the deficits being high oil, fertiliser and food subsidy which is here to stay.

As an economy, India is experiencing high real and nominal GDP growth, and in line with that corporates are seeing strong volume and top line growth. However that is not translating into bottom line growth. Infact its been shrinking and bank NPA levels are increasing despite recent change in NPA definition.

Corporate debts have gone up substantially in India from 2008 till date whereas US corporates have reduced debt. A big chunk of this debt is in external borrowing in USD, JPY and this is further squeezing the bottom lines of the corporates.

Coming to markets, India has attracted large inflow of foreign institutional (FII) money in 2012 till date and this is what has supported the markets till date. The domestic institutions (DII) have been consistently selling in the market. The day FII inflow stops or reverse the market would tank. Absolute valuations are not cheap when fixed income pays 10% to investors.

Thus, basis fundamentals I personally would avoid that market because there are better markets to invest.